As UT Inquiries Mount, So Have Frustrations

More than 2,000 pages of heavily redacted email documents — many pages were blacked out entirely — clearly reveal growing tensions among regents and top administrators at the University of Texas System and its flagship university.

by Reeve Hamilton
March 26, 2014
12 AM

Members listen to committee reports at the Board of Regents meeting for The University of Texas System on Feb. 14, 2013.
Bob Daemmrich

Even through redactions so heavy they include entire pages blacked out, more than 2,000 email documents provided by the University of Texas System clearly reveal growing tensions among its regents and top administrators.

For some of them, multiple inquiries into the operations of the University of Texas at Austin initiated by some regents — most often Wallace Hall of Dallas — have been a source of discomfort. Hall and others, meanwhile, have been frustrated by ongoing impediments to progress in their investigations.

The Texas Tribune and several other publications asked for the emails between and among regents and top officials after the resignation of UT Chancellor Francisco Cigarroa. The announcement of his departure came after years of argument inside and outside the UT community about the role of the regents, the actions of administrators at the system’s flagship university, and about the general direction of higher education in Texas.

The documents, provided under the state's public information laws, offer a glimpse into some of the recent infighting among the system’s top officials, their inquiries, arguments and discussions. Some key details may be missing as a result of the extensive redactions made to the documents by the system’s lawyers.

Despite these constraints, it is clear from the emails that Hall, who did not respond to a request for comment, has, at times, felt inadequately supported by the system as he tried to get information out of the university.

One issue was nearly $380,000 being paid to University of Texas at Austin President Bill Powers this year. According to a university spokesman, the money is deferred compensation from Powers' time as dean of UT-Austin’s law school — income he previously reported and paid taxes on, but that has been sitting in an account at the University of Texas Investment Management Company.

Earlier this year, as system officials attempted to determine the source of the money, a frustrated Hall responded, “As I have been unsuccessful in acquiring the answer to this question for over a year, I wish you luck.”

In late January, Hall wrote to Cigarroa, attaching links to university and system policies for his review along with Hall’s suggestion that they “deal with your duties and responsibilities as well as those of President Powers concerning these allegations.” The following week, Paul Foster, the board’s chairman, felt compelled to write to Cigarroa and reject “the inference that ‘you have not done your job’” that he felt was contained within Hall's messages.

Hall’s specific allegations in his note were redacted, though they appear to deal with Powers’ testimony to the House Select Committee on Transparency in State Agency Operations, which is currently investigating Hall. The regent has been accused of overstepping his authority in his pursuit of information, though he contends that gathering data about the university’s operations is his duty as a regent.

During last year’s legislative session, lawmakers created a new rule that the UT System’s board may not spend state money on investigations of any of the system's institutions or administrators without providing at least seven days' notice to the Legislative Budget Board regarding the cause and scope of the investigation.

According to a system spokeswoman, none of the following issues was reported to the LBB, as the system considers them “inquiries” and not investigations. And the list is not comprehensive. Some disputes that had not sparked much chatter recently are not included, such as Hall’s push — after a 2013 audit found the university overstated charitable giving over a six-year period starting in 2007 — for the hiring a vice president of development at UT-Austin.

The documents cover a wide range of topics.

The Law School Foundation

Perhaps the longest-pending investigation is a review of former compensation practices at UT-Austin’s law school. In March 2013, the system’s board of regents, in a split vote, decided to set aside an internal report on the issue and commission an external review.

Soon thereafter, in April, under pressure from lawmakers, they turned the matter over to the attorney general’s office, which — nearly one year later — has yet to launch its investigation.

The attorney general’s office declined to comment on the matter. However, the agency’s reasons were laid out in a December hearing of the House Select Committee on Transparency in State Agency Operations. While interviewing Cigarroa in the hearing, Rusty Hardin, the committee’s special counsel, said the investigator assigned to the case at the attorney general’s office had asked Hall and other regents for statements “setting out what they thought the investigation should be, whom it should be about, and what it is they believed was wrong.”

According to Hardin, despite multiple requests to do so, Hall was the only regent who had yet to provide such a statement. “It’s good for the person who made the complaint to spell out what they’re complaining of, so the investigator will have some parameters of what he or she is supposed to be doing,” Hardin said.

“It provides clarity of purpose,” Cigarroa agreed.

Hall did not respond to a request for comment on the matter. In the meantime, the investigation remains stalled. Though dormant, the issue has still managed to cause consternation among the board members.

On Feb. 7 of this year, Regent Bobby Stillwell emailed Cigarroa and Foster, saying he had heard that Hall had requested that all other regents’ statements to the attorney general regarding the investigation be delivered to him. Stillwell objected, saying he understood the submissions to be confidential.

“We have gotten in the bad habit of reacting instantly to every frequent demand by Mr. Hall, with little or no analysis or discussion by the Board,” Stillwell wrote. “That needs to be examined.”

Powers' Travel

Hall has raised questions about the propriety of some of Powers' travel arrangements which in some instances — including a 2008 excursion to Paris and Lisbon, a trip to St. Maarten in 2012 and a March 2013 voyage to Grand Bahama Island — are paid for in part or in full by donors. In some cases, these donors are also involved in groups that have been critical of current regents.

Hall's inquiry led to a system review of the president’s travel records, particularly involving trips for business, personal or outside-board related activities provided to Powers by someone who was not a family member.

In January of this year, Hall pressed Pedro Reyes, the system’s vice chancellor for academic affairs, on how such travel gets approved. “I’m struggling with the institutional purpose in Cabo, St. Maarten or the Grand Bahamas,” he wrote.

Reyes had actually approved Powers’ trip to the Bahamas on the basis that it was for “development and donor relations.”

Powers also travels for reasons unrelated to the university. He serves on a number of corporate boards, such as Austin-based Forestar Group. A number of his fellow board members are actively involved in UT-Austin affairs and have been critical of the regents. When he has had to travel as a part of his duties related to outside boards, Powers informed the system that the corporation paid the expense.

On Jan. 17, Powers wrote to Reyes that he could confirm “the board travel was all for board events and functions, and was provided as a normal business expense. No personal travel was gifted by a non-family member.”

Hall wrote to the chancellor, some regents and system staff to call Powers’ answer “a non-answer at best.”

According to a system spokeswoman, that matter has been closed — Powers’ travel in question was reviewed by the system and was deemed university business. To the extent that the issue has reached a resolution, emails indicate that its conclusion may have been accelerated by Cigarroa and Foster.

Foster pushed back somewhat in early January about the amount of information being demanded of Powers, noting that “if the travel was not donated, it does not seem appropriate to insist on disclosure.”

Later in the month, as Hall continued to insist on details about Powers’ donated travel, including flight manifests, Foster wrote to the chancellor, who had previously told the transparency committee that the inquiry made him uncomfortable, agreeing that “a conversation is in order.”

The Accenture Contracts

In a mid-February email, the chancellor explained that the system intended to launch a formal review of UT-Austin’s relationship with the consulting firm Accenture, focusing on “potential conflict of interest issues and other related questions.”

The firm was hired to provide support services to a group assembled by Powers called the Committee on Business Productivity, which recommended strategies that university officials said could generate as much as $490 million in savings and new revenue. It was chaired by Steve Rohleder, a group chief executive at Accenture. The initial purchase order for the company’s services to support the committee was for about $995,000. The purchase order was amended twice for a final total of more than $1,083,000.

Typically, contracts that exceed $1 million must be approved by the system board, and this one wasn’t, which apparently prompted questions.

A particular point of confusion appears to be the way in which the purchase order was made under a Texas Department of Information Resources cooperative contract. As Scott Kelley, the system’s executive vice chancellor for business affairs, wrote to Hall in February, “DIR’s cooperative purchasing program has competitively bid and negotiated contracts which have generated over $1.5 billion in purchases and $270 million in taxpayer savings according to their website. ... DIR markets these contracts and encourages participation.” He also noted that contracts through DIR do not require board approval, according to the board’s rules.

Kelley also signed off on a nearly $3 million purchase order for Accenture’s help in implementing shared services at the university. In early February, he wrote to the chancellor, noting that “this second contract ... was signed just last month and it is unlikely that the billed services yet exceed $1M.”

The implementation of a shared services strategy — which calls for consolidating the operation of services, such as human resources and information technology, that were previously staffed separately in individual units of the university — was a recommendation from the Committee on Business Productivity.

Accenture’s involvement in the proposals, and the plan to implement such an approach on campus, has been a contentious issue at UT-Austin. A resolution was even submitted to the faculty council calling for a suspension of current and future plans to implement shared services, as well as “full disclosure of the plan, including the role and compensation of Accenture.”

In the proposed resolution, it was asserted that Accenture’s involvement in supporting the committee that recommended the plan the firm was implementing resulted in “a conflict of interest that presents a severe risk of cost overrun and failure to achieve stated results.”

Referring to that resolution in a January email, Hall wrote to the chancellor: “As you know, I have been asking about this for over 6 months now with little to nothing to show for my efforts. It is time to get serious.”

In a separate email, Hall indicated that on multiple occasions, information he received from Kevin Hegarty, the university’s chief financial officer, regarding Accenture was “incomplete and unresponsive to my requests.”

As for how the formal review conducted by the system’s chief audit executive will play out, a system spokeswoman said via email, “The chancellor has no comment until he reviews the results of the review.”

The Number of Documents

In addition to his apparent concerns about Powers’ testimony to the transparency committee, Hall has also expressed strong objections to testimony given by Hegarty. While no formal inquiry has been launched, an email clearly indicates that Hall would like to see some action on the matter.

Hegarty testified that Hall’s requests for information had prompted the university to provide more than 800,000 pages of documents to the regent. In a subsequent letter to the committee, Cigarroa said the number was closer to 100,000, according to system staff.

According to a January email from Barry McBee, the system’s vice chancellor for governmental relations, the lower figure came from Francie Frederick, the general counsel to the board of regents. “I assume that if the campus still disagrees or can demonstrate that we are/she is wrong, they will do so.”

On Feb. 2, after Cigarroa’s letter was delivered, Hall wrote to the chancellor about Hegarty’s “misleading” testimony. “Will there be any ramifications for Mr. Hegarty as an employee of the UT System or will you turn a blind eye to this type of behavior?”

On Tuesday, a spokesman for the university said that they believe Hegarty’s testimony to be accurate. The spokesman said that Powers has taken no actions against Hegarty. And none appear to have been taken by the chancellor, who announced his own resignation about a week following the note from Hall.

The Admissions Policy

Hegarty was also at the middle of a flare-up in mid-January over a formal inquiry into admissions practices at UT-Austin, in particular its law school. Through his lawyers, Hall has alleged that the admissions process may be subject to undue influence by lawmakers.

Because he also serves as the university’s custodian of records, Hegarty sent a memo to the law school’s dean with instructions to not provide student data requested by the system until he had determined, in consultation with outside council, that the private information was adequately protected.

“If this is part of the new relationship between you (and by extension the Board of Regents) and President [Bill] Powers,” Hall wrote to Cigarroa the following evening, noting that the system have been seeking such information since October 2013, “I don’t believe it’s going well.”

In December, Cigarroa recommended to the board, though some regents apparently felt otherwise, that Powers should remain president, provided he work to improve his relationship with the chancellor and the board.

Cigarroa did not appreciate Hegarty’s memo either, and told the regents. But Hall said the chancellor was not addressing “the fundamental issue,” which was that Hegarty “is acting under direct supervision of Bill Powers.”

“I have no confidence that we will get full cooperation from Bill Powers now or in the future as his assurances are unsupported by the facts,” Hall wrote to Cigarroa.

Former board Chairman Gene Powell added to that sentiment, noting that he had recently been reminded that “when evaluating what a person will do in the future the past is ALWAYS the best predictor.”

“This is exactly the position in which we find ourselves,” Powell wrote. In a separate message, he asserted that Cigarroa’s call for increased cooperation in December had apparently not been “received or understood” by Powers and Hegarty, which prompted Powell to add, “I find that very disappointing,”

Cigarroa wrote a letter to Powers indicating that the delay has “become unacceptable” and instructing him and his leadership team to “fully cooperate” with the system in its admissions inquiry.

On Tuesday, UT-Austin spokesman Gary Susswein said: “We did not release that information as was demanded, because we continued to have concerns about student privacy potentially being violated. However, the issue has been resolved in a manner both campus and system agree is consistent with federal privacy laws.”

The inquiry appears to be nearing its conclusion. “The review is still in draft format but near completion,” a system spokeswoman said via email. “Currently we are receiving input from UT-Austin. We expect it to be complete within the next few weeks.”

Disclosure: At the time of publication, the University of Texas at Austin was a corporate sponsor of The Texas Tribune. Accenture was a corporate sponsor in 2011, 2012 and 2013. Paul Foster, Rusty Hardin and Bobby Stillwell have been major donors. (You can also review the full list of Tribune donors and sponsors below $1,000.)

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